You're an ace analyst for a private US firm in the Cleaning Products industry. You've gathered this financial data (in $M): Assets: Current Assets: Cash and Cash Equivalents 284 Accounts Receivable 190 Inventories 1688 Long-Term Assets: Plant, Property, and Equipment 516 Less: Accumulated Depreciation -98 Total Assets 2580 Liabilities Current Liabilities Notes Payable 258 Bonds Payable 65 Long-term Liabilites Long-term Debt, Excluding current portion 516 Equity Common Stock 189 Retained Earnings 1552

Sales 1136 COGS 454 SG&A (incl. marketing) 91 Interest Expense 67 EBT 524 Income Taxes 183 Net Income 341

Shares Outstanding: 426 million Supplemental: Due to favorable market conditions, the firm recently (following the publication of the financial results, and thus unreflected above) issued 52 million dollars of debt, and has very near-term plans to retire 26 million in equity as market conditions permit.

a. Identify 5 comparable, PUBLIC firms in the industry. Create a table of most recent common-sized income statements and common-sized balance sheets. In which sector is your industry? If there are not enough US firms within your industry, you need to broaden your search to the sector. Table needs account names in the 1st column, your private firm's common sized statements in the 2nd, and your public firm comparable common sized statements in the 3rd-7th. The 8th columm contains an average of your comps (averaging detailed in part b). Explain why the firms are good comps using ratio analysis (can combine with work from part B). b. Develop and justify a "weighting scheme" to calculate averages of financial figures from your public firms, to provide a relevant average for your firm. One approach is to give more weight to firms closer to your private firm in size or primary business activity. If you have 2 firms roughly the same size as yours, and 3 firms considerably different from your firm, a weighting scheme could reasonably be 35%, 35%, 10%, 10%, 10% (35% for each similar firm, 10% for the rest). Use the DuPont decomposition of ROE and other ratios you've learned from class to motivate your choices of weights and to demonstrate an understanding of what drives the industry. Use your best judgement, thoroughly explain your decisions, make sure the weights sum to 100%. Use these averages into the 8th column in the table in Part A. r. Use reasonable assumptions to create your own growth and expansion plan. Of paramount importance is the sales growth rate, so go into detail here. Consider all relevant costs. The project must relate to your industry. All assumptions must be explained. Create pro-forma financial statements representing the firm after the expansion. For example, you could analyze the expenses and revenues (in new long-term assets for productive capacity, labor, materials, marketing, etc.) to grow your firm's revenue. Present a cash flow timeline, NPV, IRR, and Discounted Payback, along with the WACC if it changes from capital structure adjustments or from a change to the firm's risk level. Make your strongest sales pitch here.